From the Muncie Star-Press:
Typical of government: If an idea works succeeds once, then expand and use it nearly everywhere, and ignore the consequences. Such is the case with tax increment financing (TIF) districts. There are 29 of them in Delaware County and Muncie, ranging in size from just over 10 acres to more than 1,000.
TIFs are an economic development tool designed to spur growth in areas where little exists, or areas that are considered blighted. When used judiciously, they are beneficial. When overused, they become hoarders, soaking up all the tax revenue they generate and refusing to give any back to where it’s desperately needed. What accountability that exists to oversee a TIF district often goes unseen by the public.
Here’s how they work: After a TIF district is created, property taxes generated from new construction and development within the TIF, instead of going to the usual taxing units such as schools, libraries and municipalities, are set aside and invested back in the area to promote development. Most often, money is spent on infrastructure improvement such as roads, curbs, sidewalks or utilities. Funds are also used to pay off TIF bonds, which can take up to 30 years. Funds can accumulate, but do not have to be spent within the TIF.
To look at it another way, a TIF is borrowing based on anticipated increases in property tax revenue. When a project ends and the bonds are repaid, the TIF is supposed to disappear and the tax revenue spread to all taxing units.
The trouble is, in Delaware County these districts never seem to go away, the result being that libraries, schools and other taxing units see potential funds siphoned off. Redevelopment commissions (made up of members not directly elected) that established the original TIF tap funds for other projects. Example: The Morrison Road TIF in Muncie paid for replacing Muncie fire equipment in 2009.
TIFs have helped spur development around Muncie Mall, Sallie Mae and the downtown area. Muncie’s TIFs have spurred about $61 million in new investment. There is no question they are a vital redevelopment tool for acreage within the TIF.
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See the full article here:
http://www.thestarpress.com/apps/pbcs.dll/article?AID=2014302020034
